Positive Property Investments
Home Buyer: Negotiation and Communication
The goal in a real estate negotiation is to reach a good agreement - one in which the underlying interests of both buyer and seller are met. The results of a poor agreement often return to haunt the parties after closing. Many of our real estate clients have been experienced negotiators in other industries, and we have learned from their skill and experience. Review these tips as you prepare for the purchase of your home. What do you want to achieve in the negotiation? The first step in getting what you need is simply to let the seller know - in a clear and reasoned way. For most people, the highest priority is the price they will pay for the property.
The best way to establish this is by a market analysis of the neighborhood. Set an offering price range that makes sense. Knowing your range allows you to balance the price with other needs. Your interests might include: 1) Buying at the lowest price possible. 2) Setting a closing date that meets your time frame.
3) Settling any repair issues fairly. 4) Having your concerns heard and addressed. 5) Locking in an acceptable mortgage loan rate. 6) Clearing any title or survey issues that come up. 7) Completing your relocation and job change process. 8) Getting your family settled into a home and neighborhood. 9) Forging a good working relationship with the seller. 10) Having no future problems after closing. Is an adversarial or cooperative approach more effective? Effective negotiation does not result from stubborn demands. There is nothing more destructive to the negotiation process than combative behavior.
Professional negotiators try to preserve the relationship between the principals. The goal is to avoid an impasse in which neither seller's nor buyer's goals are met. In many cases, the contract negotiation process begins with some initial distrust between buyer and seller. Effective negotiators move in the direction of trust as quickly as possible. In preparing your offer, let the marketplace establish your price, while remaining very complimentary of their home. Buyers sometimes submit a letter to the seller pointing out deficiencies and explaining why their house is not worth what they are asking. This will always backfire and start the negotiation off with a defensive seller. Sellers have an emotional attachment to their home, and will have a strong negative reaction to a critical buyer. How do you handle an adversarial strategy by a seller or agent? You may find that you have to work with a combative seller or agent. Their strategy may include: defensive arguments, emotional statements, snide remarks, threats to terminate, ego involvement, and stated positioning.
Creative solutions are difficult to find in this environment. Good control over your own emotions is critical when working with a combative style negotiator. Here are some pointers: 1) Do not argue. Arguing will position them more strongly and drag the negotiation off course. 2) Do not respond emotionally. An angry or defensive response will escalate the negotiation into a no-win battle. 3) Do not accept or reject their arguments. Listen and show that you understand their points. 4) Accept the fact that strong emotions are present. Strong emotions arouse fear and anger in others.
They may be a negotiation tactic. 5) Avoid an "us-against-them" strategy. Attach cover memos to your responses in order to communicate with the seller and break down barriers. 6) Show that your proposals were not been made unreasonably. Firmly anchor pricing, repair requests and other points to outside data. 7) Be careful not to allow hazy proposals to stand. Put everything in writing. An emotional negotiator will often produce an unclear agreement. 8) Make your offer as attractive to the seller as possible.
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